IOC mining operation outside Labrador City in Labrador. — The Canadian Press Images/Paul Daly
Three lines creeped up the right-hand side of David Liverman’s graph, projected at the front of Salon B at the Delta Hotel.
The blue line showed the province’s minimum annual iron ore production in the year 2020 — almost 40 million tonnes per year from the Labrador trough, which will actually be reached within a few years, as expansions in Labrador City and Wabush, among others, come on stream.
The yellow one, representing likely production, scrambled up above 80 million tonnes.
The eye-catching red line, though, representing maximum production, shot up over the 100 million mark.
That figure, acknowledged the assistant deputy minister for natural resources, is hypothetical — but reachable if iron ore prices stay strong and forecast production targets are realized.
“If I was working for a company, this is where I’d put up my forward-looking statement, because this is highly speculative,” he told the audience during his minerals sector overview at the annual Mineral Resources Review.
“Predicting the next 10 years is very hard. Nobody really expected what happened (recession) in 2008-2009.
“However, despite volatile commodity prices, we think that Chinese and Asian demand is going to remain strong.
“Iron ore prices are going to be very critical in terms of the major developments going forward, because a lot of them are iron ore related, and the current iron ore prices — the pundits are telling us they’re not going to stay as high as they are, but they’re also going to stay very strong, so I think the outlook is very positive for the iron ore industry.”
That much activity could more than double the number of people — currently about 6,000 — working in the mining industry, he said, and push mining’s contribution to the province’s GDP from about 12 per cent today closer to oil and gas’s 30 to 35 per cent share.
About 250 people representing mining and related businesses as well as government officials are attending the three-day conference, which includes seminars and project updates. In his welcoming remarks, new Natural Resources Minister Jerome Kennedy noted the industry’s “vast potential,” pointing to this year’s $4.7 billion in mineral shipments, the highest on record.
“Nationally and internationally, people are taking notice of how Newfoundland and Labrador has established itself as an industry leader in mineral exploration development and has one of the fastest growing economies in the country,” he said.
Rapid expansion of the mining industry will bring its own problems too, cautioned Liverman, including land-use issues, labour supply, infrastructure strain, and pressure on communities.
“It’s going to represent real problems for communities,” he said. “If you look at Western Labrador alone, if you put this kind of development in Western Labrador there, it’s going to be a real challenge for them to cope, so we need to look at innovative solutions for this. We need to plan ahead.”
Don Gallagher, president of Global Commercial and executive vice-president of Cliffs Natural Resources, said three trends are driving global demand for iron ore: the continuing infrastructure growth of emerging economies, delayed response on the supply side, and declining ore grade qualities in other iron ore-producing nations.
“What we’re competing against now are the direct-shipping ores coming out of Brazil and Australia that are declining in quality, and there’s really not much you can do with the direct-shipping ores other than set up a beneficiating plant, which is quite expensive,” he said. “Most of the projects you hear coming on in the (Labrador) Trough are concentrate, so that you have the capability to really bring it to a high grade, the raw material. So I think they’re very well placed.”
Gallagher echoed Liverman’s comments that infrastructure and other issues will prove to be a challenge over the next 10 years.
“To co-ordinate the logistics, to best serve all the constituents, will be something that will take a lot of stakeholders getting together and working on,” he said.